Power and the Limits of Power in Organisational Theory Essay Example

that the knowledge is tainted by an ideology. The knowledge that we knowcannot be assume for what it is. For example, company employees were made to believe that the work they have done is only worth the amount of wagesawarded to them. However, critical theory suggests that employees do not realise that they have been exploited because the value of their work out weighs their wages.

The goal of critical theory would be to discover the truth of the knowledge that we think we know which is to uncover the truth that the employees were indeed being exploited. Organisational power and its limitations In the topic about power, modern and critical theory have different perspective of understanding power and the limits of power in the organisation. In the modernist perspective, they focus on the distribution of power within the organisation and their goal would be to improve organisational efficiency and effectiveness.

They believe that with control, maintaining authority and power within the organisation can be done. In modernism, there are some theories of control, the cybernetic model, agency theory and market, bureaucracy or clan control. Cybernetic control uses feedback, performance evaluation and rewards to achieve organisational goals. With that, performance standards can be set and management can measure the performance of their employees in terms of sales generated so as to evaluate performance of the employees.

Organisations would be able to use the information to reward or punish employees according to work performance. Hence, most organisations use it as power over the behaviour of employees and organisational goals would be achieved (Hatch & Cunliffe 2006). Agency control helps to control the behaviour and output by the managers as

performance is dependent on the amount, relevance and quality of the information which can be manipulated by them. Hence, where organisations would have to monitor managers through behaviour or output controls which could be costly.

Agency controls are then designed in four different ways so that behaviours can be controlled easily. Two of the examples of this control would be to design and simplify a routine job so that behaviour can be observed or to use organisational culture to control behaviour (Hatch & Cunliffe 2006). Market control uses the free market to evaluate and control performance. However, limitations exists in this control theory as it depends on output control and is only effective when the product can be defined, priced and when competition exists to make price meaningful.

Bureaucratic control uses the standardization of behaviour through procedures and rules and depends on behaviour controls and the existence of a hierarchy system for supervision. The limitation lies in the rapid changing environment, which makes environment uncertain, thus, difficulty to access results may cause these controls to fail (Jaffee 2008). Therefore, clan controls would be most efficient under such situations. It uses culture, norms and expectations to control performance and group behaviour. By establishing desirable culture in organisations, members of the organisation would sanction undesirable behaviour.

This is useful for professionals as they are commited to behave according to their profession. However, the professional commitement may not be to the interest of the organisation thus, making it a limitation to this form of control. Therefore, the limits of power in modernism are the limitations in the different theories. In addition, resistance, which will be mentioned in the later part of

the essay, is also one way which limits the power in the modernist view as it is not encouraged. In critical theory, power is defined as domination.

An example of ideology is the idea that men have to marry women or men have to provide for their families. Critical theory criticizes ideology as they believe that managerial ideology allows managers and organisations to dominate, manipulate and exploit workers. . Hence, in a workplace, power is unequal as workers are being dominated by the managers and their organisations. They do as they are told because managers have power such as legitimate, coercive, reward and expert power over their actions. In addition to that, workers are being paid by for their labour and what they have produced.

For example, in a workplace, workers are paid by the hour or for the time they worked not by the work that they produced. Profits of the organisations are by capital that they have invested in and by commodity. Hence, in order to gain greater profit, they would have to achieve or gain more from the commodities. In this case, commodities are machines or by human labour. Through exploitation of workers, such as reducing wages, increasing productivity of workers and longer working hours, organisations gain a greater profit. The only way to limit power in critical theory is through resistance.

Workers can resist to the unequal power in the workplace by complains, theft, sabotage, absenteeism, quitting their job or working slowly on purpose. When workers come together to resist, they can go on strikes or form trade unions to limit power of the organisation. As compared to modernism, critical theory encourages resistance as

it helps to balance the unequal power that exists in the work place. However, by doing so, they result in inefficiency and costs which is thus discouraged and limitation in the view of modernist.

When workers willingly allow managers and organisations to dominate them, they are in a state of false consciousness which allows organisations to attain exploitation. As we are constantly being influenced by the culture that we live in, practices and values influences us to act in a way which benefits organisations. Since people were born, they were taught to know that managers and owners have the right to dominate them by the practices and actions of what others are doing. However, workers do not know that they have been exploited because this is a common practise which is done by everyone (Hatch & Cunliffe 2006).

Practices from scientific management are ways of managerial control and is explained in labour process theory. Labour process theory suggests that organisation take away control from workers by simplifying and deskilling the work. In scientific management, deskilling is how work is analysed and broken down into tasks that can be done efficiently (Blake & Moseley 2010). As the tasks are broken down and can be done by anyone, it limits worker’s power to resist when they are exploited because by doing so, they may be replaced.

For example, the usual task to assemble a toy is separated and done by many people. One may be tasked to nail parts of the toy together while another tasked to paint the toy. Therefore, the job become easy and could be done by anyone resulting in workers not having power to resist even

if they are dissatisfied. By deskilling, the organisation also benefits through efficiency as work gets done faster, thus increasing profits. With deskilling, managers can once again gain managerial power and dominate workers as their resistance would be futile. Part B Introduction

The second part of the assignment focuses on using the perspective of modernism and critical theory on organisation’s relationship with the environment, using Wal-Mart as an example. In modernism, the organisational environment is defined with clear boundaries between the organisation and the environment, anything that is outside the boundary may impact the organisation. The environment has power over organisations as organisations need resources from the environment, such as suppliers and they also sell their products to the environment. Therefore, the environment controls the organisation.

However, in the modernist perspective, they want organisational efficiency and effectiveness, so organisations have to manage the environment in order to gain control and power. The environmental contingency theory is used in modernism where the success of organisation is dependent on the environment. Wal-Mart operates in a stable environment where workers do routine activities and mechanistic organisational form takes place as it uses standard procedures. Hence, these activities allow Wal-Mart to achieve cost minimization and maximum profits (Hatch & Cunliffe 2006).

In modernism, Wal-Mart exercises power and authority over their employees by using bureaucratic control of managerial power to shorten the working hours for their employees so that they would not qualify as full time workers and lose their full time workers benefit. In this way, Wal-Mart would be able to save additional costs for providing healthcare benefits for employees as many would not qualify for it which would play a part in

the success of Wal-Mart. In addition, employees were also forced to work without clocking in for work and most complied in order to keep their jobs.

The same acts are considered exploitation in the perspective of critical theory and the success viewed by modernist is dependent on externalities such as the government (Rosen 2005). In perspective of critical theory, employees who are not qualified for healthcare benefits would turn to government healthcare, which increases the burden of tax payers. People have been tricked into the wrong impression of Wal-Mart’s success due to false consciousness of the boundaries by modernism when in fact, they built their success by exploitation of the environment (Jacques et at. 2003).

Employees are exploited to work longer hours without being paid and disqualified for their full time benefits. However, employees do not have a choice and are willingly exploited out of fear of losing their jobs. Resistance was not tolerated in Wal-Mart as they took measures to prevent employees from forming unions. As unions would increase the cost of operation for Wal-Mart, they threatened to close stores or lay off many employees if unions won (Jacques et at. 2003). Therefore, Wal-Mart has control over employees and exercises their power to keep wages of employees low.

Moreover, with the low prices that Wal-Mart is offering, they have resulted in many local supermarkets and businesses to close down. Hence, being one of the biggest malls and probably one of the few employers in town, losing their jobs may mean a great deal for employees (Jacques et at. 2003). Contrary to critical theory, it can be argued that employees in Wal-Mart who work there are not blinded

by false consciousness, but because they do not have any other choice due to the lack of job opportunities in town as small business are driven away.

The approach taken by Wal-Mart, to provide products at low prices is using the population ecology theory where it focus on survival strategies and gaining power by defeating their competitors, in this case, other supermarkets (Hatch & Cunliffe 2006). Wal-Mart also exercises power and authority over their partners such as their suppliers with the use of their bargaining power and information that they have on the products. In the modernist approach of the resource dependence theory, organisations have to manage their dependence on the environment by developing counter dependence.

One of the methods would be to establish relationship with other firms or through vertical integration (Xia 2010). With the use of barcodes, Wal-Mart has access to the information of sales trends, shifts in demands which used to be only available to manufacturers. With the detailed information that they obtained, Wal-Mart has information of buying trends and knowledge which exceeded manufacturers, thus leading to the buyer driven commodity chain (Lichtenstein 2009). One of the examples which show how Wal-Mart has power over suppliers is Procter & Gamble (P&G). P&G used to have market power over prices, retail display and credit.

However, as Wal-Mart becomes stronger, they became one of P&G’s biggest customers. They had much more information of P&G’s products than what P&G had researched. When P&G collaborated with Wal-Mart for just in time ordering and delivery systems, not only was the process more efficient, it raises $250 million of P&G’s profit. With that, Wal-Mart had power over P&G’s pricing and product

development. With their power they exercise exploitation by demanding product redesigning in the benefit of Wal-Mart and the cost to be borne by suppliers like P&G.

P&G tried to resist Wal-Mart’s power by developing counter dependence with mergers with other companies, but even after mergers, they could not resist Wal-Mart’s power.

Power and limits to power in Wal-Mart’s broader environmental relationships Using the modernist approach, Wal-Mart manages the environment by buffering, to expand and capture economies of scale to ensure sufficient input and effective distribution of output, which would be able to protect Wal-Mart from uncertainties of the environment (Davis & Stout 1992). Doing so, Wal-Mart expanded their store to five times the original size, from 1000 discount stores in 1987 to 2000 discount stores in 1990, emerging to be the fifth biggest retailer in America.

Adding on, the use of boundary spanning, such as the use of bar codes to gather key information of competitors and other information,also means more power for Wal-Mart (Petrovic & Hamilton 2006). In addition to that, Wal-Mart developed counter dependency over the environment by locating new markets and alternative resources in other countries like China. With globalisation, Wal-Mart is able to source for alternative resources in countries such as China and this act further emphasizes their power over the suppliers as these suppliers are now facing competition from foreign suppliers.

Wal-Mart can use this power to demand quantity discounts from local suppliers based on their share in consumer market, and also threaten suppliers as Wal-Mart now has alternative suppliers for their goods (Petrovic & Hamilton 2006). Furthermore, due to Wal-Mart’s market power, manufacturers have little resistance due to its ability to reach out

to global consumers (Edelson 2009). Wal-Mart’s actions forces suppliers to accept low profit margins, rapid turnover and high sales volume (Petrovic & Hamilton 2006).

As a result, many workers in America loses their production job as they face competition from workers in third world countries who will work long hours of very little wages. Furthermore, in order to meet demand of Wal-Mart to produce at low wages, companies which Wal-Mart subcontracts are found to force workers to work under abusive conditions by forcing them to work overtime, denied healthcare and even limited bathroom breaks so as to achieve efficiency to meet targets set by Wal-Mart (Jacques et at. 2003).

This once again shows the perspective of critical theory where employees are being exploited which is the result of Wal-Mart’s power over their suppliers. With Wal-Mart’s strategies on cost reduction and power over suppliers, they have managed to drive out majority of their competitors and small business in town where Wal-Mart is located have to close down (Jacques et at. 2003). With the closure of businesses in towns, consumers are forced to buy they groceries from Wal-Mart thus, Wal-Mart have control over what it wants to sell and ultimately what consumers can buy (Jacques et at. 003). The relationship of Wal-Mart and the environment in America is therefore an exploitative relationship as they are the dominant key player and have great power over the workers and suppliers there which they exploit as mentioned above. Expansion of Wal-Mart is not as successful in certain countries such as China, difference in culture and presence of unions have caused uncertainty in the environment thus Wal-Mart does not enjoy power as much

comparing to America.

Using the environmental contingency theory, the income of the population and culture does not allow mechanistic organisational form which uses standard procedures to take place. Wal-Mart has to take organic organisational form where flexibility, innovation and adaptation is needed (Hatch & Cunliffe 2006). Such actions can be found as Wal-Mart goes upmarket in China as people could not afford products sold in Wal-Mart. In China, Wal-Mart’s strategy is ‘go global, go native, and go up-market’ (Gerreffi & Ong 2007).

Applying critical theory, Wal-Mart’s power over their suppliers faces resistance as suppliers in China are rebelling against the low margins and workers’ growing discontent. In Germany, Wal-Mart faces competition from local competitors which also practices discounting and Korea where competitors prevent suppliers from going to Wal-Mart, it limits the power of Wal-Mart. In countries such as Mexico, where unions are compulsory, they had to accept unions in order to operate (Tilly 2006).

Therefore, the relationship of Wal-Mart and the international environment is not an exploitative as the environment in the different countries has power over Wal-Mart. Conclusion Wal-Mart’s relationship with the organisational environment could be shaped by the ‘pathological’ nature of the corporation to achieve greater profits so as to satisfy shareholders. In order to achieve greater profits, Wal-Mart minimises operational cost by providing low wages with minimal benefits.

Wal-Mart’s focus on competing with other competitors, gaining power and achieving greater profit shows how modernism is applied in Wal-Mart. Resistance from suppliers and employees shows the limitations to Wal-Mart relationship over the organisational environment. In conclusion, the use of theories in modernism and critical theory is applicable in describing Wal-Mart and its relationship with the environment as

it uses modernist theories such as resource dependency to show how Wal-Mart develops counter dependency plans and environmental contingency theory to show the adaptability of Wal-Mart in other countries.

Critical theory is applicable in showing how acts of Wal-Mart are viewed as exploitation and how employees and their partners try to resist power from Wal-Mart.

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